WT/TPR/S/232 Trade Policy Review 
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(1) INTRODUCTION  
1. Since Chinese Taipei's previous TPR in 2006,  trade-policy-related institutional changes 
include the establishment of the Office of Tr ade Negotiations in 2007, as its primary trade 
negotiations body, and the Intellectual Property Court in 2008.  Chinese Taipei has made good 
progress in its regulatory reform and seems to have  most of the necessary legal and administrative 
mechanisms in place for regulatory transparency and reviews.  Many laws and regulations are made 
available through publications a nd government websites.  Chinese Taipei met virtually all its 
notification requirements under various WTO Agreemen ts during the review period.  Anti-corruption 
efforts were pursued with the amendment of the Co rruption Penalty Act and the preparation of a draft 
"integrity action plan". 
2. Chinese Taipei increased its involvement in  the multilateral trading system, becoming a 
signatory to the plurilateral Agreement on G overnment Procurement from 15 July 2009, and 
continued to participate actively in efforts fo r the successful conclusion of the Doha Round of 
negotiations.  Chinese Taipei pursued free-trade agreem ents (FTAs) with trading partners in Central 
America, and is continuing or planning negotiati ons with others.  FTAs are becoming motivated 
primarily by economic considerations.  In addition to  its contribution to aid fo r trade and trade-related 
technical assistance activities, Ch inese Taipei has provided duty-free treatment for selected imports 
from least developed countries (LDCs).  Despite so me opening to cross-strait investment recently, 
Chinese Taipei continues to prohibit inbound cross- strait trade involving some 2,243 tariff lines.  
3. Inbound investment remains subject to a positiv e list (from China) or negative list (from 
elsewhere).  Inbound direct investment is permitt ed in most sectors, but it remains prohibited in 
several major sectors (notably, certain toxic chemical s, "radio television" and "radio broadcasting") 
for reasons of essential security and public health;  in certain other sectors (e.g. cable or satellite 
television and broadcasting, basic telecoms, air a nd maritime transport) it requires approval.  As 
regards cross-strait outbound direct investment, a set of measures were taken in 2008 aimed at 
broadening the range of investment opportunities available to Chinese Taipei companies seeking to 
invest in China and vice versa.  Various incentiv es, including tax incentives, continue to encourage 
investment, including inbound direct investment. 
(2) GENERAL INSTITUTIONAL FRAMEWORK1 
4. Since its first Review (in 2006), Chinese Taipei's  institutional framework has undergone some 
important changes, which entered into effect on 12 January 2008.  These include:  a reduced number 
of seats (from 225 to 113) in the legislature, and an in crease of its term, from three to four years;  the 
transfer of its basic law-amending power to the pe ople through referenda;  and the obligation that at 
least half of the legislators are women.2  
                                                      
1 For further information about Chinese Taipei's institutional framework, see 
http://www.president.gov.tw/en/prog/news_release/document_content.php?id=1105496091&pre_id=110549870
1&site=&menu_id=&file_name=&group=&g_category_number=411&category_number_2=373 [6 August 2009]. 
2 Reportedly, the main advantages brought through these changes consist of:  the higher threshold of 
votes required, which is likely to en hance legislators' responsiveness to the needs of their constituencies and 
discourage vote-buying;  the more coherent ratio of the number of legislators to the population, which should 
facilitate legislative procedures;  the election-related costs should be reduced;  and the guarantee of a higher Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page 17 
 
 
5. Since 1996, the highest government authority has been elected directly by the citizens, and 
may hold office for no more than two consecutive fou r-year terms.  All acts are conducted in his/her 
name, including promulgation of laws  and decrees.  The highest government authority, by resolution 
of the executive, may issue emergency orders and take all necessary measures to avert imminent 
danger affecting the security of the people, or to c ope with any serious financ ial or economic crisis.  
6. The executive (or the Cabinet), the highest administrative organ, includes a number of 
ministers and chairpersons of commissions or coun cils, and several ministers without portfolio who 
are appointed by the highest government authority  upon the recommendation of the head of the 
government of the executive.  These officials are not necessarily from the political party of the highest 
government authority. 
7. As from February 2008, the 113 members of the le gislative serve a term of four years, which 
is renewable after re-election.  The functions of the legislature are, inter alia :  to decide by resolution 
statutory or budgetary bills. 
8. The judiciary consists of courts at all levels (Supreme, high and district courts);  according to 
the authorities, it is an independent judiciary.  It is  responsible for the adjudication of civil, criminal, 
and administrative litigation, as well as the disciplin e of civil servants.  As from 2003, its 15 grand 
justices have been nominated and, with the consen t of the legislative, appointed by the highest 
government authority for a term of eight years;  they cannot serve consecutive terms.  However, eight of the grand justices (including the president a nd the vice-president of the judiciary) who were 
nominated by the highest government authority in 2003 served a four-year term.  Through group 
consultations, the grand justices interpret the basic law of Chinese Taipei and unify the interpretation 
of all other laws and ordinances.  A notable deve lopment since the previous  TPR is the establishment 
of the Intellectual Property Cour t on 1 July 2008 (Chapter III). 
9. Other central government institutions in place are responsible for the "examination, 
employment and management" of all civil servants, and for exercising the powers of impeachment, 
censure, and audit.  
10. Apart from the central government, two other high levels of local government have been in 
place since 1999:  special municipalities
3 and county municipalities.  Townships municipalities are the 
lower level local governments.  County governments are headed by magistrates and city governments 
by mayors, all of whom are directly elected for a four-year term, and may be re-elected for a second 
term.  Under the amendment of the Local Government Act in 2009, a special, county or township 
municipality can merge into a new special muni cipality with the approval of the executive.4  
Following the amendment of the Local Government Act in 2007, the regulations covering special 
municipalities also apply to counties with a populatio n of more than two million.  Local governments 
have the right to pass self-governance laws or re gulations as well as to impose their own taxes.  
According to the authorities, no production- a nd/or trade-related local taxes are in place. 
                                                                                                                                                                     
minimum proportion of female legislators.  For furt her details, see http://www.gio.gov.tw/taiwan-website/5-
gp/yearbook/contents.html [5 August 2009]. 
3 The two special municipalities, directly under the jurisdiction of the executive are Taipei City and 
Kaohsiung City.  For further details on local government, see http://www.gio.gov.tw/taiwan-website/5-
gp/yearbook/contents.html [5 August 2009]. 
4 Following approval by the executive on 1 September 2009, the Taichung county and city, the Tainan 
county and city, and the Kaohsiung special municipality and county are going to merge into a new special 
municipality separately.  In addition, the executive approved the Taipei County to become a new special municipality. WT/TPR/S/232 Trade Policy Review 
Page 18 
 
 
(3) STRUCTURE OF TRADE POLICY FORMULATION , IMPLEMENTATION AND EVALUATION  
(i) Executive branches of government 
11. The Ministry of Economic Affairs (MOEA) is the main governmental agency involved in the 
formulation of Chinese Taipei's trade policy;  it is vested with the power to conclude and sign 
trade-related agreements with Chinese Taipei's tr ading partners.  Other ministries and agencies are 
also involved in the formulation, implementation, and evaluation of trade policy.  
12. MOEA's administrative agency, the Bureau of Foreign Trade (BOFT) follows issues relating 
to import/export administration, the WTO, the OECD , and other internationa l and bilateral economic 
and trade affairs, and facilitates trade policy implementation.5  Since 2004, the Committee of Global 
Trade Policy Strategy Alliance and Arrangeme nt, consisting of ten ministers and one 
secretary-general, has made high level policy decision s on strategies for participating in international 
economic and trade organizations, and for signing fr ee-trade agreements.  Under the auspices of the 
Committee, the MOEA regularly convenes the Task  Force composed of 53 senior officials from 
bureaus of ministries;  the Task Force coordinat es Chinese Taipei's standpoint on trade negotiations.  
Seventeen working groups under various ministries deal with policy coordination and implementation 
on specific trade and trade-related issues at technical experts level6;  these groups report to both the 
Committee and the Task Force, dependi ng on the matter.  Since 30 March 20077, the Office of Trade 
Negotiations (OTN), the primary trade negotiati ons body under the MOEA and the Committee, has 
been in charge of closely monitoring interna tional trade developments  and proposing negotiation 
strategies;  tracking changes to international trade regulations and recommending adjustments to 
related domestic policies and regul ations;  coordinating government agencies involved in trade issues, 
and advising the Government on policy positions that best serve Chinese Taipei's interests and 
advancing those interests at bilateral, regional, a nd multilateral trade talks;  providing legal advice on 
trade-related matters;  and representing Chinese Ta ipei in WTO dispute settlement proceedings.8   
(ii) Advisory, planning, and other bodies 
13. According to the Administrative Procedures Act,  the regulatory authorities must use open and 
transparent administrative procedures, consult with interested parties before issuing regulations;  
provide advance notice, public hearing, and comme nt periods for proposed rules;  and publish all 
regulations.  The private sector expresses its views to the authorities through symposiums, 
conferences, and seminars held by the Governme nt, interviews by government officials, and 
questionnaires.  With a view to collecting industri es' views on industrial development and trade policy 
directions, and to meeting needs for structural adju stment in industries, the MOEA runs an industry 
policy review system, and since 1985 has maintain ed an Industry Development Advisory Council 
(IDAC).  Its members include experts, scholars, and representatives of business sectors.  IDAC may 
serve as a communication platform among parties of  different interests and, thus, enhance the 
transparency of policy implementation.  Under th e IDAC, there are six reviewing bodies, including 
                                                      
5 For more information on BOFT, see http ://eweb.trade.gov.tw [25 August 2009]. 
6 These groups cover the following areas:  agricultu re, SPS, TBT, rules, i nvestment, market access, 
services, rules of origin, import licensing procedures, TR IPs, trade in civil aircra ft, government procurement, 
trade and development, trade and environmen t, trade facilitation, RTAs, and competition. 
7 Until that date, economic and trade negotiations were handled by different agencies, making it 
difficult to adapt to the increasingly complex international trade environment (MOEA online information.  Viewed at:  http://w2kdmz1.moea. gov.tw/english/index.asp?p1=home&p2=subhome&pid=20070330174526 
[1 September 2009]). 
8 For more information on the OTN'S activitie s, see http://w2kdmz1.moea.gov.tw/english/ 
index.asp?P1=subordinate_units&p2=u9 [4 September 2009]. Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page 19 
 
 
the trade and investment review body convened by the Director-General of the BOFT.  Reviews are 
normally held every two months.  Between 2006 and 2008, IDAC organized five committee hearings 
and 36 reviewing committees, covering, inter alia,  regional economic integration, inbound 
investment, and industrial policy analysis in a post-financial crisis era.    
14. Since September 2003, the WTO Center of the Chung-Hua Institution fo r Economic Research 
(CIER) has undertaken:  strategic and significant cro ss-field research in order to support government 
policies related to the WTO;  the setting up of a WTO database and website to enhance information 
flow and provide learning support;  training of ta lented individuals in trade and economics;  and 
promotion of international exchange activities in order to increase Chinese Taipei's role in WTO 
work.9  
(4) TRADE POLICY OBJECTIVES  
15. Chinese Taipei's overall trade policy objectives re main virtually unchanged since its previous 
Review and are governed by its desire for increased integration into the global economy.10  T h e y  
include:  active participation in the WTO and ot her multilateral trade and economic organizations 
(e.g. Asia Pacific Economic Cooperation foru m, Organization for Ec onomic Cooperation and 
Development) to enhance the Chinese Taipei's positi on;  the negotiation of FTAs to expand economic 
and trade networks (section (6)(ii));  the strengthening of trade facilitation11 and promotion activities;  
the elimination of trade barriers in its trading part ners' markets;  and the diversification of export 
markets.  In line with these objectives, during th e period under review, Chinese Taipei maintained a 
stable environment of MFN customs tariff and non-tariff protection;  in addition to increased 
preferential tariff treatment for imports originating in LDCs and FTA trading partners, it temporarily 
reduced tariff protection for certain basic cereals to mitigate the impact of rising world prices.  
Protection for agricultural activities has remained more important than for manufacturing, which 
benefits from numerous tax and non-tax incen tives (section (8)(iii), Chapters III and IV). 
(5) TRADE LAWS, REGULATIONS , AND TRANSPARENCY  
16. Chinese Taipei's obligations under the WTO Agreements supersede those under domestic 
laws or regulations.  Trade, including all matters covered by WTO Agreements, falls within the power 
of the Government of Chinese Taipei.  In the ev ent that the measures taken by local levels of 
government have an impact upon trade, those measur es are subject to regulation by the Government 
of the Separate Customs Territory, which may ove rrule or invalidate measures of local levels of 
government.  A natural or juridical person whose ri ghts and interests in a matter relating to issues 
covered by the WTO Agreements are impaired by an administrative action in Chinese Taipei is 
permitted to appeal such action.12 
                                                      
9 Online information.  Viewed at:  http://ta iwan.wtocenter.org.tw/w towebeng/aboutus.asp 
[15 February 2010]. 
10 For more information by MOEA and BOFT, see http://w2kdmz1.moea.gov.tw/ 
english/index.asp?P1=introduction&P2=goals_and_princip les&P3=Trade_Policy;  and http://eweb.trade.gov.tw/ 
kmi.asp?xdurl=kmif.asp&cat=CAT492 [11 August 2009]. 
11 Under Stage II, "Trade Inter-Networking" 2007-2 011, of the Trade Facilitation Plan, the strategy, 
inter alia,  consists of building an all-digital trade environm ent, integrating information exchange networks, and 
strengthening the value-added features of the single e-trade service window (FTN et).  According to the 
authorities, between 2003 and 2009 the implementati on of the Plan created benefits estimated at 
US$346.3 million mainly through the simplification and standardization of procedures. 
12 WTO document WT/ACC/TPKM/18, 5 October 2001. WT/TPR/S/232 Trade Policy Review 
Page 20 
 
 
17. By 2007, Chinese Taipei had reportedly made good progress in its regulatory reform 
programme in line with the APEC's Bogor Goal;  it  seems to have most of the necessary legal and 
administrative mechanisms in place for regulatory transparency and reviews.13  With a view to 
aligning Chinese Taipei with international practice,  promoting legal reform, simplifying procedures, 
and deregulating, the authorities have  taken action in several areas.  To facilitate more "bottom-up" 
reforms in regulation, between 2000 and 2007 a "Golden Axe Awards" scheme has encouraged 
government employees to identify inefficient, unnecessary or outdated regulations14;  since its 
inception, administrative and citizens' cost- savings have amounted to US$5.27 billion and 
US$3.57 billion, respectively, as well as 28 million work days.  Chinese Taipei has implemented a 
Regulatory Impact Analysis (RIA) mechanism si nce 2000, and this was made mandatory in a 
simplified form as from 2006.15  The RIA is operated by the Legal Affairs Committee, the Research, 
Development and Evaluation Commission (RDEC) , and the Council for Economic Planning and 
Development (CEPD)16, all agencies of the executive.  An  "outside-in" mechanism is used for 
gathering the inputs of non-Chinese-Taipei stake holders including the American Chamber of 
Commerce in Taipei (AmCham)17, the European Chamber of Commerce Taipei (ECCT), and the 
Japanese Chamber of Commerce and Industry in Taip ei (JCCIT).  To facilitate the submission of 
practical suggestions by the civil society, the CEPD  has set up a deregulation suggestions platform on 
its website, and calls related ministries and co mmissions together for a "rolling" review of 
regulations.18  The CEPD regularly reports on the progress of deregulation to the ministers without 
portfolio, and announces the Govern ment's response to deregulati on suggestions on the platform 
website.  Since the platform's establishment in Sept ember 2008, 23 suggestions have been received, of 
which 3 resulted in deregulatory action.  The C EPD and MOEA regularly organize seminars with 
non-Chinese-Taipei investors to gather their s uggestions on laws and re gulations;  the CEPD 
coordinates with other government agencies to take appropriate action concerning the suggested 
improvements.   
18. As a result of these efforts there has been subs tantial deregulation in services, investment, and 
customs, especially relating to free-trade zones.19  Deregulation efforts are now aimed at improving 
competitiveness and effectively promoting economic development.  Since May 2008, the Cabinet has 
undertaken the deregulation of 32 policies involving 40 laws and regulations, and another 67 policies 
to be relaxed by the end of 2008 covered, inter alia,  cross-strait economic and trade relations;  the 
financial market;  tax administration;  land utiliza tion;  human resources, education and training;  
                                                      
13 Chinese Taipei recognizes three core concepts in its  regulatory reform programme:  (1) deregulation, 
simplification of administrative procedures, active innova tion, and the relaxation of controls;  (2) establishment 
of a modern and highly efficient regulatory environment under the principles of maximizing benefits, 
simplifying government administration, and better serving the people;  and (3) establishment of active, 
energetic, and efficient administrative organizations (APEC, 2007b). 
14 Further information about this scheme is provided in APEC (2007b). 
15 APEC (2008b). 
16 The CEPD can be asked to evaluate the performa nce of major economic deve lopment projects.  Its 
Centre for Economic Deregulation and Innovation (CEDI) is in charge of coordinating the overall deregulation 
and regulatory reform programme and acts as an interm ediary between the private sector and the Government, 
to gather opinions of businesses and the public (APEC, 2007b). 
17 According to AmCham, insufficient transparency remains a problem.  Rather than consulting with 
industry representatives at an early stage when considering a change in po licy, a regulatory body often arranges 
a meeting or calls for a public hearing only after a pre liminary decision has already been made.  This precludes 
any industry input to influence the initial decision.  Similarly, the time allowed between the announcement of a new regulation and the date on which it goes into effect  is often insufficient (American Chamber of Commerce, 
2009). 
18 Council for Economic Planning and Development (2008a) and (2008b). 
19 APEC (2007b). Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page 21 
 
 
industries requiring special permission;  logistics;  and enterprise operations.20  At end-October 2009, 
various administrative agencies had completed over 400 items of deregulation.  The Government is 
reviewing, with a view to revising, pertinent laws and regulations with  the aim of creating a 
favourable environment for the development of six emerging industries:  biotechnology, travel and 
tourism, green energy, medical care, high-end agricultu re, and cultural and creative industries.  At the 
same time, the Government is to proceed with re gulatory reform to improve the business environment 
in areas indicated by the ratings in the World Bank's Doing Business  report.  Chinese Taipei also 
undertook the APEC-OECD Integrated Checklis t of Regulatory Reform process in 2006.21   
19. Chinese Taipei has been engaged in a pro cess to ensure regulatory transparency for 
several years, and has apparently made substantial progress.22  Its laws are publicly available through 
publications and on government websites in Ch inese and, in several cases, also in English.23  An 
integrated Cabinet Gazette  is issued daily and is available online.24  It is divided into nine main 
categories including rules and regulations, administra tive directions, notices, enforcement directives, 
public information disclosure, and ot her reports;  resolutions of the executive meeting are collected in 
appendices or published sepa rately in supplements. 
20. WTO notification is an important instrument  for transparency.  Between 2006 and 2010 
(1 March), Chinese Taipei met notification requirements under various WTO Agreements (Table AII.1), except for those relating to domestic support in agriculture (2007, 2008);  according to 
the authorities, these will be submitted when require d data become available (Chapters III and IV).
25  
Chinese Taipei's first notification on import lic ensing requirements since 2004 was submitted in 
August 2009.  
21. With a view to fighting corruption26, the executive has taken numerou s policy, legislative, and 
institutional anti-corruption measures during the pe riod under review:  a pproving and launching the 
Anti-Corruption Action Plan (30 November 2006);  revising the Act on Property-Declaration by 
Public Servants (enforced from 1 October 2008);  prescribing the Integrity and Ethics Directions for 
Civil Servants (in force from 1 August 2008);  setting up the Central Anti-Corruption Commission 
(1 August 2008);  enforcing the Lobbying Act (e nacted on 8 August 2008);  revising the Political 
Donation Act (enforced from 13 Fe bruary 2009);  implementing the newly revised Act on Property-
                                                      
20 Council for Economic Planning and Development (2008b). 
21 The Checklist is a voluntary tool  that member economies may use to evaluate their respective 
regulatory reform efforts (APEC/OECD, 2005). For its self-assessment report, see http://www.oecd.org/ 
dataoecd/19/61/37521558.pdf [1 September 2009]. 
22 APEC (2007b). 
23 Chinese Taipei ranks 27th (19th in 2004) among 48 economies based on the 2009 Opacity Index, 
which measures the degree to which they lack clear, acc urate, easily discernible, and widely accepted practices 
governing the relationships among governments, businesses, and investors.  The Opacity Index consists of 
five components that may be thought of as "negative social capital".  These are:  corruption, legal system 
inadequacies, economic enfo rcement policies, accounting standards and corporate governance, and regulation.  
Together, they spell CLEAR.  Chinese Taipei's score in re gulation is much better than that obtained in the area 
of corruption (Kurtzman and Yago, 2009). 
24 Cabinet Gazette.   Viewed at:  http ://gazette.nat.gov.tw. 
25 As of 30 June 2009, there were six outs tanding WTO notifications (http://stat.wto.org/ 
CountryProfile/WSDBCountryPFView.aspx?Language=E&Country=TW [17 August 2009]).  By end 2009, the authorities indicated that they had submitted the notifications according to the related WTO Agreements and 
will continue to do so in the future. 
26 According to the 2008 Corruption Perceptions Index , which measures perceptions of corruption 
among public officials and politicians in 180 countries and economies, Chinese Taipei ranked 39th with a score 
of 5.7 out of 10 (Transparency International online information.  Viewed at:  http://www.transparency.org/ policy_research/surveys_indices/cpi/2008).  In 2005, it ranked 32
nd (out of 159) with a score of 5.9 out of 10. WT/TPR/S/232 Trade Policy Review 
Page 22 
 
 
Declaration by Public Servants;  organizing integr ity meetings in local governments (February 2009);  
amending the Anti-Corruption Statute (enacted on 22 April 2009);  drafting the Act on Recusal of 
Public Servants Due to Conflicts of Interest (M ay 2009);  fine-tuning the Money Laundering Control 
Act (enacted on 10 June 2009);  proclaiming an  integrity building action plan (8 July 2009)27;  and 
adjusting the Anti-Corruption Statute (submitted to  the legislature on 2 October 2009).  Since 2000, 
Ministry of Justice law enforcement bodies (compr ising the prosecutors' offices, the investigation 
bureau, and the public services ethics system) have been  targeting specific areas deemed to be prone 
to corruption.28  The main policy tools include the Corr uption Penalty Act, the Witness Protection 
Act, the Anti-money-laundering Act, and the Public  Servants Conflict-of-interest Act, as well as 
various task forces.  From July 2005 to July 200 9, various district prosecutors' offices pursued 
2,164 cases related to corruption and indicted 7,238 persons.  
(6) TRADE AGREEMENTS AND ARRANGEMENTS  
(i) The WTO 
22. Chinese Taipei has been a WTO Member since 1 Janua ry 2002.  It is a pa rty to the plurilateral 
Trade Agreement on Civil Aircraft and, as from 15 July 2009, to the plurilateral Agreement on 
Government Procurement (Chapter III).   
23. Chinese Taipei applies its MFN tariffs to all trading partners, with the exception of some 
countries or customs territories.29  Chinese Taipei prohibits inbound cross-strait trade involving some 
2,243 tariff lines (HS 10-digit level), mostly agricu ltural products but also pharmaceuticals, iron and 
steel, electrical and electronic items, a nd textile-related products (Chapter III). 
24. Despite the negotiation and conclusion of mo re preferential trade agreements during the 
review period (section (4) and section (ii) below), Ch inese Taipei maintains that the preservation of a 
strong multilateral trading system is essential to th e smooth operation of the "world trading order", 
and considers itself to be contributing, to a very  substantial extent, to the development of the 
multilateral trading system.  It has actively support ed and participated in the Doha Development 
Agenda (DDA) negotiations, and wishes to achiev e a successful conclusion of the Doha round.  
Chinese Taipei is a party to various negotiating gr oups, including Friends of Sectoral Approaches, 
Friends of Anti-dumping Negotiations, informal sub- groups regarding various services sectors, and 
the G-10, a group of major food importing Members.  During the WTO  Ministerial-level Signalling 
Conference of Trade in Services, held on 26 July 2008, Chinese Taipei cemented relations with its 
partners by attending meetings at groups including the Recently Acceded Members (RAMs) on 
special provision on tariff reduction, the Ginger Group for further openness of markets in Trade in 
                                                      
27 This plan mobilizes central government agencies and county/city governments.  It contains 8 specific 
actions, a 44-item strategy, and 80 measures.  The specific actions are:  strengthening corruption eradication and 
prevention;  following through public service ethics;  promoting corporate honesty;  propagating education and 
publicity;  raising efficiency and transparency;  ensuring openness in government procurement (including 
establishing an integrated e-procuremen t system);  practicing fair participation in elections;  and participating in 
international cooperation activities in this area.  On 22 May 2009, the Ministry of Justice produced an 
assessment report on the establishmen t of a full-time government integrity organization, and in December 2009 
initialized a study of the institutionalization, organization, and functions of government ethics. 
28 These are:  very large procurements, giant engineering projects, construction control, land affairs, 
funeral parlours, the police, fire-fighting service, business registration, urban planning, motor vehicle 
management, taxation, customs service, medical care, environmental protection, financial operations, correction 
institutes, the judiciary, education, and the excavation of sand and gravel. 
29 MFN tariff rates are applied to merchandise im ports from all WTO Memb ers and countries, and 
customs territories from which Chinese Taipei receives reciprocal treatment (Chapter III). Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page 23 
 
 
Services, and the G10 on agricultural issues.30  Chinese Taipei wishes to see the resumption of the 
DDA negotiations as soon as possible on the basis of what has been achieved without re-opening 
issues already agreed.31   
25. Chinese Taipei has made contributions to the DDA Global Trust Fund for technical 
cooperation activities (2006), the Trade Facilitation Trust Fund (2007), and the Special Trust Fund 
established to finance the travel costs for th e participation of LDC delegations in the 7th Ministerial 
Conference (2009);  it has also continued to pr ovide the least developed WTO Members with 
technical assistance and capacity building progr ammes under the Integrated Framework.   
26. Chinese Taipei's response to th e Aid for Trade initiative has, inter alia,  been through 
assistance in trade capacity building to its partne r countries in cooperation with the Agency for 
International Trade Informa tion and Cooperation (AITIC).32  In addition to taking part in donor 
meetings, Chinese Taipei seeks suitable opportunities to expand technical assistance and educational 
and training activities with other donor countries.  Regarding  multilateral cooperation, Chinese Taipei 
intends to further enhance its c ooperation with the WTO and other organizations fa cilitating regional 
development.33  In 2007, Chinese Taipei provided US$515 million in international assistance, 
accounting for 0.13% of its GDP34;  in 2008, it spent approximately US$430 million in official 
development assistance, accounting for 0.11% of its  GNI.  Technical assistance efforts included 
providing consultancy services for small and medi um-sized enterprises, vocational training, 
agricultural and fishery aid35, and aid to help trading partners build their own telecommunication and 
other high-tech infrastructure.  Most of this tec hnical assistance seems to be limited to beneficiaries 
with diplomatic recognition of Chinese Taipei. 
(ii) Preferential trade agreements 
27. Increased participation in free-trade agreements  (FTAs) and economic integration in the Asia 
Pacific region, using the NAFTA and the EU as mode ls, are Chinese Taipei's main tools for attaining 
key trade policy objectives, such as market divers ification, globalization of domestic firms, and 
promotion of non-Chinese-Taipei investment and gr owth (section (4)).  The negotiation of FTAs is 
motivated primarily by economic considerations.  Reportedly, Chinese Taipei has targeted FTAs with 
                                                      
30 "Recent Developments and Participation in the Doha Round Negotiations" viewed at:  
http://ewto.trade.gov.tw/ct.as p?xItem=14231 &ctNode=1037&mp=2 [2 September 2009]. 
31 Statement by Mr. Yi-fu Lin, Permanent Repr esentative of Chinese Taipei to the WTO on 
30 July 2008, on behalf of Chinese Taipei and the RAMs group.  Viewed at:  http://www.wto.org/english/ 
tratop_e/dda_e/meet08_stat_tpkm_30jul_e.doc [2 September 2009];  and Government Information Office online information.  Viewed at:  http://w ww.gio.gov.tw/taiw an-website/5-gp/yearbook/06fo reign% 20relations.html#01 
[5 September 2009]. 
32 In collaboration with AITIC the Government held two seminars on Aid for Trade and Trade-Related 
Assistance in the Caribbean region in 2008 and 2009, respectively. 
33 During the review period, regional activities co-hosted with the WTO included the Seminar on Trade 
Rules and Trade Remedies (2006), Regional Seminar on Non-Agricultural Market Access Negotiations for 
Asian Economies (2007), and WTO Advanced Regional Seminar for South-East Asian Economies on 
Multilateral Negotiations under the GATS (2008).   
34 Taipei Times  online, 22 September 2008.  Viewed a t:  http://www.taipeitimes.com/News/taiwan/ 
archives/2008/09/22/2003423876 [28 August 2009]. 
35 For instance, Chinese Taipei su pported projects in Guatemala (pap aya export programme), Honduras 
(tilapia aquaculture and marketing), Panama (safe vege tables and fruit programme), Paraguay (vegetable 
seedlings marketing), and El Salvador (salt-water shrimp farming) ( China Post,  21 August 2008.  
Viewed at:  http://www.chinapost. com.tw/taiwan/foreign%20affairs/2008/08/21/171060/Taiwan-helps.htm 
[28 August 2009];  and Central News Agency , 27 December 2008.  Viewed at: http://www.etaiwannews.com/ 
etn/news_content.php?id=823188&lang=eng_news [28 August 2009]). WT/TPR/S/232 Trade Policy Review 
Page 24 
 
 
Central American countries to, inter alia,  gain access to the United States market under NAFTA and 
CAFTA through investment in these countries.36  According to the authorities, there is an increasingly 
favourable international environment for Chinese Ta ipei to negotiate FTAs with its major trading 
partners. 
28. As regards multilateral work on Regional Trad e Agreements (RTAs), Chinese Taipei supports 
the WTO Transparency Mechanism for RTAs;  it cons iders that the mechanism's factual presentations 
help Members to acquire a more comprehens ive understanding of RTAs-related issues.  The 
authorities believe that this mechanism might prevent RTA proliferation from undermining the multilateral negotiations.
37 
(a) Regional and plurilateral agreements  
Asia-Pacific Economic Cooperation (APEC)  
29. Chinese Taipei has participated actively in APEC 's work since its accession in 1991.  At the 
2006 APEC Economic Leaders' Meeting in Hanoi, Chin ese Taipei declared its full support to APEC's 
policies on key issues;  asserted APEC's role in  promoting regional economic integration;  and 
indicated its will to use APEC's influence for resuming and bringing to conclusion the Doha Round.38  
Chinese Taipei has taken part in several APEC activities39, and has implemented more than 
100 APEC-related policy measures to promote trade and investment liberalization and facilitation 
(TILF) with its APEC neighbours.40  Within the APEC, Chinese Taipei has also signed several 
bilateral mutual recognition agreements (MRAs).  It  supports the technical infrastructure development 
project of the APEC Subcommittee for Standards and Conformance (SCSC) and the goal of "one 
standard, one test, one certificate, accepted worldwide".41  Furthermore, the Joint Statement of the 
2009 APEC Ministerial Meeting welcomed, inter alia,  Chinese Taipei's contributions to:  the APEC 
Support Fund (ASF) promoting energy-efficiency activities in the region;  the Workshop on the 
Framework of Long-Term Capacity Building for Disaster Risk Reduction hosted from 30 November 
to 1 December 2009 to encourage collaboration betw een regional institutes and to strengthen regional 
emergency management capacity;  and the establis hment of the APEC SME Crisis Management 
Center, a mechanism to help APEC SMEs enhance their capacity to overcome the impact of crises.  
30. Reportedly, Chinese Taipei is committed to  and has made progress towards achieving the 
Bogor Goals of free and open trade and investment by  2020;  the authorities consider that these Goals 
should exceed WTO obligations, i.e. to be "WTO-plus".42  Since 2004, Chinese Taipei has submitted 
its Individual Action Plans (IAP) to the APEC.  Acco rding to its APEC Peer Review of January 2007, 
                                                      
36 See:  http://www.bilaterals.org/rubrique.php3?id_ rubrique=99 [24 August 2009].  Total trade 
(imports plus exports) between Chinese Taipei and the five Central American countries has not exceeded 0.1% 
of total external trade (Chapter I).   Since the signing of these FTAs Chines e Taipei's imports of coffee, sugar, 
frozen shrimps, and frozen beef from this region have risen steadily. 
37 Chinese Taipei Representativ e Office in Belgium (2007b) . 
38 Government Information Office online informati on.  Viewed at:  http://www.gio.gov.tw/taiwan-
website/5-gp/yearbook/06fo reign%20relations.html#01 [5 September 2009]. 
39 These include economic and technical cooperation (ECOTECH) activities and initiatives (such as 
Transforming Digital Divide into Digital Activities, and The APEC Digital Opportunity Center).  ECOTECH is 
the schedule of programmes designed to build capacity and skills in APEC Member Economies to enable them 
to participate more fully in the regional economy and the liberalization process.  For further information on 
ECOTECH, see http://www.apec.org/apec/news___media/f act_sheets/esc___ecotech.html [1 October 2009]. 
40 These include:  the promotion of  paperless trade, APEC Business Travel Card, IPR Service Centre, 
the liberalization of capital flows, and domes tic legislation for fair trade (APEC, 2007b). 
41 APEC (2007b). 
42 APEC (2007b). Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page 25 
 
 
Chinese Taipei has liberalized be yond its WTO obligations in some  areas, such as intellectual 
property rights and trade facilitation, but there are ar eas, such as tariffs, where there is no willingness 
to exceed its WTO commitments.   
Chinese Taipei-El Salvador-Honduras FTA43 
31. The Chinese Taipei-El Salvador-Honduras FTA w as signed on 7 May 2007 after four rounds 
of negotiations, and took effect on 15 July 2008.44  By end 2009, the parties were in the process of 
preparing its notification to the WTO.  Since the en try into force of the agreement, 3,590 items from 
Chinese Taipei (57.1% of all HS tariff lines) en ter duty free into El Sa lvador's market, and 
5,688 items (64.4%) from El Salvador enjoy simila r treatment in Chinese Taipei (Chapter III);  ten 
years later (i.e. 2018), these figures should increase to 65.4% and 93.1%, respectively.  Furthermore, 
3,881 items from Chinese Taipei (61.9% of all HS  tariff lines) benefit from tariff-free entry into the 
Honduras market, and 6,135 items (69.4%) from Honduras benefit from similar treatment in 
Chinese Taipei;  within ten years of the entry in force of the agreement (i.e. 2018), these shares should 
rise to 70.3% and 93%, respectiv ely.  The agreement covers, inter alia, market access for goods, rules 
of origin and related customs pro cedures, safeguard measures, technical barriers to trade, sanitary and 
phytosanitary measures (SPS), measures on standards, trade in services (financial, 
telecommunications), investment, and dispute settlement.45   
(b) Bilateral agreements 
Chinese Taipei and Panama 
32. The FTA between Chinese Taipei and Panama has been in place since 1 January 2004.  It was 
notified to the WTO under GATT Article XX IV and GATS Article V, on 28 July 200946, and is 
scheduled to be considered by the Committee on Regional Trade Agreements in 2010.  Chinese 
Taipei grants duty-free treatment to items origina ting in Panama, covering 97.9% of all tariff lines 
(Chapter III).  Bilateral trade in 2004, 2005, 200 6, 2007, and 2008 grew by 112%, 96%, 71%, 103%, 
and 136%, respectively.  Bilateral investment fl ows also grew considerably.  Chinese Taipei 
investment in Panama is concentrated in wholesal e and retail operations as well as transportation and 
warehousing;  Panamanian investment in Chinese Ta ipei is mainly in manufacture of leather goods 
and related products, and w holesale and retail trade. 
Chinese Taipei-Guatemala FTA 
33. The FTA between Chinese Taipei and Gu atemala was signed on 22 September 2005 and 
entered into force on 1 July 2006.47  It has not yet been notified to the WTO.  At end 2009, the parties 
were in the process of preparing its notification to the WTO.  Chinese Taipei grants duty-free 
treatment for items originating in  Guatemala covering 97.4% of all tariff lines (Chapter III).  Exports 
to Guatemala dropped after the entry in force of the agreement, due to the impact of the hike in oil 
prices on transport costs;  nevertheless, Chinese Ta ipei's imports from Guatemala grew, mainly as a 
result of massive coffee and sugar imports.  Chinese Ta ipei investment in Guatemala has grown and is 
mainly in housing, department stores, manufacture of  instant noodles;  no Guatemalan investment in 
Chinese Taipei has been registered. 
                                                      
43 Figures contained in this and the following sections are provided by the authorities.  They may differ 
from those found in factual presentati ons prepared by the WTO Secretariat. 
44 The part of the FTA relating to Chinese Taipei and El Salvador took effect on 1 March 2008. 
45 For further details, see APEC (2007a). 
46 WTO document WT/REG268/N/1 - S/C/N/501,  3 August 2009. 
47 APEC (2007a). WT/TPR/S/232 Trade Policy Review 
Page 26 
 
 
Chinese Taipei-Nicaragua FTA 
34. Chinese Taipei and Nicaragua signed an FTA on 16 June 2006.  It entered into force on 
1 January 2008 and was notified to the WTO under GATT Article XXIV and GATS Article V on 
9 July 2009.48  It is scheduled for consideration by the Committee on Regional Trade Agreements in 
2010.  Chinese Taipei grants duty-free treatment for items originating in Nicaragua covering 96.8% of 
all tariff lines (Chapter III).  The agreement also covers, inter alia , rules of origin and related customs 
procedures, trade facilitation, standards and require ments, SPS measures, technical barriers to trade, 
services and investment, environment and intellectual property rights.49  Imports from Nicaragua grew 
103% in 2008 over the previous year.  By contrast, exports to Nicaragua showed a decrease of 39%.  
Similarly, Chinese Taipei investment in Nicara gua decreased by US$86.8 million while there is no 
Nicaraguan investment registered in Chinese Taipei.  The drop in exports and investment were mainly 
due to closures and withdrawal of Chinese Taipei te xtile businesses from Nicaragua as a result of their 
global re-deployment, which led to considerable  reductions in imports of raw materials from 
Chinese Taipei.  
Agreements under consideration or negotiation 
35. Chinese Taipei is negotiating an FTA with the Dominican Republic50, as well as an Economic 
Cooperation Framework Agreement (ECFA) with China.51  To further increase its trade potential, it 
also intends to explore opportunities for negotiating agreements with its major trading partners with 
which it maintains political relations, especially thos e in East Asia, but also Australia, Canada, Japan, 
Korea (Rep. of), the EU, and the United States, among others.52  On 5 January 2009, Chinese Taipei 
                                                      
48 WTO document WT/REG267/N/1 - S/C/N/500,  14 July 2009;  and APEC (2007a). 
49 APEC (2007a). 
50 In February 2005, the Dominican Republic and Ch inese Taipei signed a memorandum of intention 
for negotiating an FTA;  a first round of negotiations was held in October 2006;  since then no progress has been 
made (APEC, 2007a);  online information.  Viewed at:  http://www.president.gov.tw/en/prog/news_release/ 
document_content.php?id=1105499778&pre_id=1105499778&g_category_number=145&category_number_2=145 [4 September 2009];  and Dominican Today , 5 August 2008.  Viewed at:  http://www.bilaterals.org/ 
article.php3?id_article=12862 [1 September 2009]. 
51 The first round of talks with China was held on 26 January 2010.  In May 2008, the Chinese Taipei 
highest government authority, Ma Ying-jeou, evoked the possibility of entering into discussions for a general 
cross-strait economic agreement (ECFA) to, inter alia,  address economic issues such as investments by Chinese 
Taipei financial institutions in China, investment protec tion, and double taxation agreements.  Talks could also 
involve the eventual negotiation of an FTA-type agreement.  For further details, see http://www.bilaterals.org/ 
article.php3?id_article=12017;  China Post,  "What to expect from financial deals", 25 April 2009.  Viewed at:  
http://www.chinapost.com.tw/commentary/2009/04/2 5/ 205611/What-to.htm [13 May 2009];  China Post,  
"Plans to hold China economic talks at end 2009", 13 April 2009.  Viewed at:  http://www.chinapost.com.tw/ 
china/2009/04/13/204093/Taiwan-plans.htm [13 May 2009];  China Post,  "Signing CECA with Beijing is 
business, not politics", 21 February 2009.  Viewed at:  http://www.chinapost.co m.tw/editorial/2009/02/21/ 
196986/Signing-CECA.htm [13 May 2009];  and the Financial Times , 25 January 2010. 
52 Since 1997, Chinese Taipei and the United States have been discussing the possibility of a bilateral 
free-trade or investment agreement.  Bilateral talks on  a Trade and Investment Fram ework Agreement (TIFA) as 
a premise to an FTA were held on 11  July 2007;  no formal negotiations took place, but both parties decided to 
launch a Consultative Committee on Agriculture (CCA) to help in sharing agricultural technology issues (such 
as crops used for producing bio-energy), and to addr ess some topics, such as SPS issues, following WTO 
guidelines.  For more information, see Taipei Economic and Cultural Office in Atlanta online information.  
Viewed at:  http://www.teco.org/press/2008-PR/200826-ft a.ppt [3 September 2009];  http://www.bilaterals.org/ 
article.php3?id_article=9067;  and http ://www.bilaterals.org/rubrique.php3?id_rubrique=99 [3 September 2009];  
and Inaugural Address.  Viewed at:  http://www .president.gov.tw/en/prog/news_release/document_ 
content.php?id=1105499687&pre_id=1105499687&g_category_number=145&category_number_2=145 [2 September 2009]. Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page 27 
 
 
established an ASEAN Taskforce to plan work re lated to ASEAN, includi ng enhancing bilateral 
relations with individual ASEAN member countries;  Chinese Taipei intends to gradually participate 
in ASEAN regional events by signing agreements, initiating industrial coopera tion, and joining this 
group.  
(c) Unilateral trade preferences 
36. Chinese Taipei grants duty-free access to items of least developed country (LDC) origin 
(Chapter III);  the product covera ge is particularly limited compared with that of its FTAs.  
Chinese Taipei does not receive GSP (Generalized Sy stem of Preferences) treatment from any of its 
trading partners;  nor does it provide GSP tr eatment to imports from developing countries. 
(7) TRADE DISPUTES AND CONSULTATIONS  
(i) Dispute settlement in the WTO 
37. Since its previous TPR, Chinese Taipei has b een a complainant in one case under the WTO 
Dispute Settlement Mechanism;  this concerns ta riff treatment by the EU and its Member States of 
imports of certain inform ation technology products.53  During the same period, Chinese Taipei 
participated in panels involving ten cases, as a third party.  Chinese Taipei has never been a 
respondent in a WTO dispute settlement case. 
(ii) Other 
38. Under Chinese Taipei's FTAs and other bilate ral agreements on promotion and reciprocal 
protection of investment, there are general provisions for settling disputes through bilateral 
consultation, arbitration and/or meditation.  No su ch trade or investment related disputes have been 
dealt with under these provisions since 2006.   
(8) INVESTMENT REGIME  
(i) Direct investment 
39. Chinese Taipei considers investment an importa nt policy tool for economic growth, and looks 
to both trade and inward investment to fuel its transformation into a knowledge-based economy.54  
Despite a relatively low FDI/GDP ratio, good progress h as been made in liberalizing inward as well as 
outward investment in the south-east Asia re gion, particularly to China (Chapter I and 
section (8)(ii)).55  As from March 2008, non-Chinese-Taipei inv estors have been allowed to trade in 
equity derivatives56 and structured instruments57 with domestic securities firms and banks 
                                                      
53 A panel was established in September 2008 and co mposed on 22 January 2009;  its final report was 
to be issued in December 2009.  However, the Panel indi cated its intention to take more time to complete its 
work due to the complexity of the subject matter.  Its report is expected to be issued around end-April 2010.  
This was the third case brought by Chinese Taipei as a complainant since its accession to the WTO (WTO 
documents WT/DS377/1, G/L/853, 16 June 2008, and WT/DS375/10 - WT/DS376/10 - WT/DS377/8, 
23 July 2009). 
54 APEC (2007b). 
55 Chinese Taipei began outward investment in other south-east Asian economies to diversify 
production locations, taking advantage of both cheaper labour and GSP privileges of these economies in developed markets (APEC, 2007b). 
56 Under the "GreTai Securities Market Rules Governing Over-the-Counter Trading of Financial 
Derivatives by Securities Firms", those equity derivatives include:  options and equity swaps involving Chinese Taipei equities, denominated either in local or  foreign currency, as well as options and equity swaps WT/TPR/S/232 Trade Policy Review 
Page 28 
 
 
(Chapter IV).  Despite some minor setbacks,  Chinese Taipei remains well positioned at the 
international level in terms of ease of doing business and investment risk.58  There are, however, a few 
difficult areas for greater investment liberalizati on in Chinese Taipei, including the land ownership 
rights reserved for investors from countries with which Chinese Taipei has reciprocal treatment 
agreements and the privatization delays.59  Due to remaining cross-straits economic and related 
restrictions, the need to push forward with the ECFA talks is urgent. 
40. The Investment Commission of the Ministry of Economic Affairs (MOEA), remains 
responsible for inbound and outbound direct investment matters;  other government agencies are consulted in accordance with existing laws and regul ations governing the investment project.  Since 
2005, the MOEA has operated a single web-based platform (Single Sign-On System (SSO)) for 
commercial and industrial business re gistrations and administration online;  by providing these online 
services, including registration, verification of comp any name, and change of applications, the SSO 
has greatly improved the administrative efficiency  and convenience of services, thus reducing the 
procedures for case handling from seven days to th ree days.  MOEA's Depa rtment of Investment 
Services (DOIS), known as the IDIC until May 2006, serves as a single window for 
non-Chinese-Taipei investors, providing informatio n on the investment environment, tax laws and 
regulations, incentives, and other investment-related ma tters;  it also offers assistance in dealing with 
problems related to land, utilities, manpower, etc.  The Coordination Office for Investment Promotion 
(COIP), within the MOEA, helps eliminate investment barriers in various areas.
60  
41. Inbound investment that would result in non-Ch inese-Taipei ownership of more than one 
third of the shares of an enterprise requires the approval of the MOEA.61  Inbound direct investment is 
prohibited in industries where it may negativel y affect essential security, "good customs and 
practices" or health or the environment, and in  other industries, including forestry and logging, 
manufacture of certain chemicals used for expl osives, manufacture of certain pesticides and 
herbicides, firearms and weapons, certain land tr ansportation, postal servi ces, postal saving and 
remittance services, "radio television" and "radio  broadcasting", and special recreational services 
(Table II.1).  Some other sectors are "restricted", i. e. subject to approval from the authority in charge 
of the industry.  Cable broadcasting and televisi on and satellite broadcasting and television industries 
are subject to approval.   Non-Chinese-Taipei inv estment in light-truck and passenger car rental and 
leasing was relaxed from "prohibited" to "restricted" on 16 May 2008.  These industries are contained 
in the Negative List for Investment, last amended on 16 May 2008 (Table II.1).62  In addition, the 
Mining Law, Land Act, Law of Ships, Shipping Law, and Civil Aviation Act contain several 
restrictions on FDI.  
                                                                                                                                                                     
involving foreign equities, denominated in local or foreign currency.  Financial Supervisory Commission online 
information.  Viewed at:  http://www.sfb.gov.tw/e- sfb/Latest%20Improvement.htm [6 September 2009]. 
57 The structured instruments include products denominated in local or foreign currency and linked to 
domestic or foreign equity or interest rates.  Financia l Supervisory Commission online information.  Viewed at:  
http://www.sfb.gov.tw/e-sfb/Latest%20Imp rovement.htm [6 September 2009]. 
58 In 2009, the World Bank ranked Chinese Taipei 61st (out of 181 countries) for overall ease of doing 
business, 3 positions lower than in 2008.  Similarly, Chinese Taipei's ranking dropped by 4 positions to 70th, in 
terms of protecting investors (World Bank, 2009).  In 2009, Chinese Taipei was ranked fifth-lowest-risk country 
for investment among 50 nations evaluated by the Business Environment Risk Intelligence (BERI) 
(Taipei Times,  10 May 2009.  Viewed at:  http://www.tai peitimes.com/News/biz/archives/2009/05/10/ 
2003443235 [25 August 2009]). 
59 APEC (2007b). 
60 For further details on the institutional responsibilities in the area of direct investment, see 
WTO (2006);  and http://investtaiwan.nat.gov.tw. 
61 For further details on this, as well as on pr ohibited and restricted sectors, see WTO (2006). 
62 See MOEA Investment Commission online informati on.  Viewed at:  http://www.moeaic.gov.tw/. Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page 29 
 
 
Table II.1 
Inbound direct investment prohib itions and restrictions, 2009 
1.  Prohibited 
Forestry and logginga 
Manufacture of nitroglycerin used in gun powder/explosive pillars and involving public safety (for military use) 
Soda-chloride factories operating with mercuric electrolyzersb 
A category of chemical products in accordance with the prohibition of chem ical weapons of the United Nationsb 
CFC, halon, methylchroform, carbon tetrachlorideb 
Manufacture of toxic chemicals prohibited pursuant to Toxic Chemical Control Actb 
Gun powder fuses, agents of fire and fulminating mercury (for military use) 
Manufacture of pesticides, herbicides and environm ental agents prohibited pur suant to relevant lawsb 
Cadmium smeltingb 
Firearms, weapons manufacture, arms repair , ammunition and fire-control (for militar y use, exclusive of military aircraft) 
Passenger bus services (including city  and highway passenger bus services)a 
Taxi transportationa 
Tour bus servicesa 
Postal servicesb 
Postal saving and remittance servicesb 
Public notary servicesa 
Radio broadcasting industry 
Radio television industry 
Special recreational services 
2.  Restricted 
Paddy rice, dry-land food crops, special crops, vegetables, fru it, mushrooms, sugar cane, flowers, other agriculture and hortic ulture, cattle, 
hogs, chickens, ducks, other animal husbandry 
Fishing 
Manufacture of wine and liquorb 
Manufacture of tobaccob 
Manufacture of nitroglycerin used in gun powder/explosive pillars and involving public safety (for industry use) 
Manufacture of nitroglycerin not used in  gun powder/explosive pillars and involvi ng public safety (for military use) 
Manufacture of toxic chemicals subject to appr oval pursuant to Toxic Chemicals Control Actb  
Gun powder fuses, agents of fire and fulminating mercury (for industry use) 
Manufacture of drugs and medicinesb 
Manufacture of Chinese medicinesb 
Manufacture of pesticides, herbicides and environmental agents subject to approval pursuant to relevant lawsb 
Manufacture of  swordsb 
Arms repair, ammunition (e xclusive of military use)b 
Military aircraft (manufacture and repair of aircraft, and parts) 
Military instrument and equipment 
Processing of ivoryb 
Electric power supply 
Fuel gas supply by pipe lines 
Water supply 
Trucking, fixed-route trucking and container trucking carriers 
Transport by ship and ship-leasing servicesa 
Civil air transporta 
Airport ground servicesa, air cargo forwarding servicesb, air cargo terminal servicesb, and air catering servicesa 
Table II.1 (cont'd) WT/TPR/S/232 Trade Policy Review 
Page 30 
 
 
 
Harbour and the relevant services (private ship hauling, shipment consolidating, wate r freight loading, unloading and forwardin g, minor 
repair of boats and ships, supply of  sailors' daily needs and cargo salvage) b 
Type I telecommunications enterprisesc 
Banks, credit cooperatives, trust and investme nt, bills financing, credit card companiesb 
Personal insurance, property and liability insuran ce, reinsurance carriers,  auxiliary insuranceb 
Light-truck, passenger car rental and leasing 
Offices of lawyers, scrivener's services 
Accounting servicesb 
Architectural and engineering technical servicesb 
Cable broadcasting and televi sion, satellite broadcasting 
a Investment not prohibited or restricted  for Separate Customs Territory of Taiw an, Penghu, Kinmen and Matsu people living 
overseas. 
b Investment by Separate Customs Territory of Taiwan, Pe nghu, Kinmen and Matsu investor s also prohibited/restricted. 
c According to Article 12 of the Telecommunications Act, telecomm unications enterprises are classi fied into Type I and Type II 
enterprises.  Type I enterprises are defined as enterprise th at install telecommunications lin e facilities and equipment in ord er to 
provide telecommunications services.  Type II enterprises are de fined as telecommunications enterprises other than Type I. 
Note: For the purpose of this table, direct investment includes investment by Separate Customs Territory of Taiwan, Penghu, Kin men 
and Matsu people living overseas. 
Source:  Information provided by the Chinese Taipei authorities.  
42. Non-Chinese-Taipei investors must obtai n approval for their company name in 
Chinese Taipei from the MOEA's Department of Commerce or Investment Commission (investments in ordinary industrial zones).  The approved investment must be undert aken in full within the set time 
limit, or the approval may be revoked.  Inward di rect investment (other than from China) in 
enterprises that are expropriated for reasons of essential security is subject to compensation, under certain conditions.
63  
43. The approval/examination procedure takes two da ys on average, for investments (or capital 
increases) of no more than NT$500 million and not on the Negative List for Investment.  For investments (or capital increases) involving NT$500  million to NT$1 billion and not on the Negative 
List, the average is three days.  The average examination period fo r investment (or capital increases) 
that involve NT$1 billion or more, or those on the Negative List is three weeks.   
44. Non-Chinese-Taipei persons may lease or pur chase land for certain usage (e.g. offices, 
residences, factories, and churches) on a reciprocal basis.
64  Chinese Taipei has reciprocal treatment 
arrangements with more than 59 other economies wh ere Chinese Taipei natural persons are also 
allowed to own land.  Non-Chinese-Taipei investor s may be allowed to acquire land for investments 
that are helpful to major infrastructure projects,  overall economic development, or agricultural and 
animal husbandry industries as approved by the releva nt authorities.  Land in forestry, aquaculture, 
salt plants, mineral deposits exploitation, and wa ter resources may not be transferred to, used as 
collateral by, or leased to non-Chinese-Taipei persons. 
                                                      
63 Enterprises with less than 45% non-Chinese-Taipei investment may be requisitioned or expropriated 
by the Government based on essential security considerations, but with payment of proper compensation;  
enterprises in which non-Chinese-Taipei investors hold at  least 45% of the total capital will not be expropriated 
or requisitioned by the Government within 20 years of the initial investment. 
64 APEC (2007b). Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page 31 
 
 
45. Chinese Taipei maintains bilateral agreements on investment protection with 27 countries65;  
all agreements contain an MFN clause, applied on a reciprocal basis, excep t for one agreement where 
Chinese Taipei's commitment is unilateral.  By end 2009, it had conclu ded agreements for the 
avoidance of double taxation with respect to inco me taxes with 16 countries and is willing to 
negotiate with other interested economies66;  among these agreements only the agreement with 
Singapore contains "tax sparing" provisions, as the "tax sparing" provisions contained in the agreements with Malaysia and Viet Nam have e xpired.  Chinese Taipei also maintains bilateral 
agreements with 13 economies providing for the exemption from income tax of shipping and/or air transport enterprises.
67  Chinese Taipei has also signed ATA (admission temporaire/temporary 
admission) Carnet agreements or related administrative protocols with 16 economies.68   
(ii) Cross-strait investment 
46. Chinese Taipei reviews and regulates all outbound cross-strait investments;  as of 
September 2009, there were 37,488 cases of outbound cross-strait direct investment, mostly in manufacturing, representing a total of US$79.67 billion.  Outbound cross-strait direct investment 
requires approval from the MOEA Investment Commi ssion.  A set of measures has been passed 
aimed at broadening the range of investment oppor tunities available to Chinese Taipei companies 
seeking to invest in China.  In August 2008, the ceiling on outbound cross-strait investment by 
Chinese Taipei businesses was raised from 40% to 60% of their net worth.
69  At the same time the 
ceiling on capital flows to China by individual investors was raised from US$2.67 million to 
US$5 million per person per year.70  In addition, the ban on non-Chinese-Taipei issuers from using 
funds raised in Chinese Taipei to make direct or i ndirect investment in China was removed.  It was 
also announced that  companies headquartered in Chinese Ta ipei – or local subsidiaries of 
non-Chinese-Taipei-based multinational enterprises – would be exempt from any investment caps.71  
                                                      
65 Argentina, Belize, Burkina Fa so, Costa Rica, the Dominican Re public, El Salvador, Guatemala, 
Honduras, India, Indonesia, Liberia, FYR of Macedon ia, Malawi, Malaysia, the Republic of the Marshall 
Islands, Nicaragua, Nigeria, Panama, Paraguay, the Philippines, Saudi Arabia, Senegal, Singapore, Swaziland, 
Thailand, the United States, and Viet Nam. 
66 These are:  Australia, Belgium, Denmark, the Ga mbia, Indonesia, FYR of Macedonia, Malaysia, the 
Netherlands, New Zealand, Senegal, Singapore, South Africa, Swaziland, Sweden, the United Kingdom, and 
Viet Nam.  Though procedures for outward remittances ha ve been simplified, there remains a cap on outflows as 
each Chinese Taipei resident has a maximum accumulate d settlement account of US$5  million (US$50 million 
for companies), and anything in excess require the central bank's approval (APEC, 2007b).  Chinese Taipei has 
not been able to negotiate double taxation treaties with tw o of its largest sources of FDI, the United States and 
Japan. 
67 The 13 economies are:  the European Union, German y, Israel, Norway, and Sweden (shipping only);  
Canada, Luxembourg, Thailand, and Macao, China (air transport only);  and Japan, the Republic of Korea, the Netherlands, and the United States  (shipping and air transport). 
68 Australia, Canada, El Salvador, the European Union, Israel, Japan, the Republic of Korea, Malaysia, 
New Zealand, Norway, the Philippines, Singapore, South Africa, Switzerland,  the United States, and Viet Nam. 
69 Until then, businesses based in Chinese Taipei with a net asset value of US$167 million were 
allowed to invest up to 40% of their net worth in China.  The cap was 30% for companies with a net asset value 
between US$167 million and US$334 million, and 20% for the firms valued above this amount (Government information Office online information.  Viewed at:  http://www.gio.gov.tw/ct.asp?xItem= 38830&ctNode=2462 
[6 September 2009];  and Mainland Affairs Council on line information.  Viewed at:  http://www.mac.gov.tw/ 
english/index1-e.htm [28 August 2009]). 
70 Government Information Office online information.  Viewed at:  http://www.gio.gov.tw/ct.asp?xItem 
=38830&ctNode=2462 [5 September 2009]. 
71 The certification of "headquarters" is issued by the Industrial Development Bureau.  This measure 
was conceived to improve the overall investment climate;  help companies upgrade their technology knowledge;  
encourage local and foreign businesses to set up operati ons in Chinese Taipei, thus bringing up to NT$5 trillion 
(US$153 billion) of capital back to Chinese Taipei.  Chinese Taipei's largest 577 companies have invested, or WT/TPR/S/232 Trade Policy Review 
Page 32 
 
 
Investment review procedures were also streamlin ed (i.e. outbound cross-strait investments with a 
capital amount of under US$1 million may be reported up to six months after the investment has been 
made);  and special case-by-case investment a pproval by the Investment Commission will only be 
required if a project has an accumulated cap ital amount of more than US$50 million.72  At the same 
time, a review mechanism for key technology and capital to maintain Chinese Taipei's industrial 
competitiveness and advantages was to be put in pl ace.  In certain manufacturing, agriculture, 
services, and basic infrastructure construction sector s, Chinese Taipei prohibits outbound cross-strait 
direct investment;  the list of prohibited sectors is reviewed annually by the MOEA or whenever necessary in consultation with Council of Mainland China Affairs, Council of Agriculture, Financial 
Supervisory Commission and other re levant government agencies,  and decided by the Government of 
the Separate Customs Territory.  No bilateral a rrangement is in place for investment protection 
between Chinese Taipei and China;  the authorities i ndicated that they plan to negotiate such an 
agreement.   
47. Inbound cross-strait direct investment requires approval by the Investment Commission, in 
accordance with relevant regulations.  Restric tions are implemented through a positive list of 
industries open to investment originating in China
73;  on 30 June 2009, the MOEA announced 
192 items open to investment from China, includi ng 64 items in the manufacturing industry, 117 in 
the services industry, and 11 in public construction.74  At end-July 2008, the executive approved a 
proposal to relax non-Chinese-Taipei company listin g requirements and to allow qualified domestic 
institutional investors (QDIIs) to invest in the lo cal stock market, with a view to strengthening the 
competitiveness of Chinese Taipei cap ital markets and to develop Chinese Taipei into an Asia-Pacific 
asset management and fund-raising center.75  On the same date, the authorities removed the 
restrictions that banned any non-Chinese-Taipei company with outbound cross-strait investments 
exceeding the statutory ratio of its net worth from applying for primary listing on the Stock Exchange 
(TSE) or the over-the-counter (OTC) market;  they  also removed the requirement that banned any 
non-Chinese-Taipei company with over 20% of its shares owned by investors from China or whose 
major shareholders are investors from China from making a secondary listing on the TSE or OTC 
market.76  Moreover, restrictions that banned non-Chin ese-Taipei issuers from using funds raised in 
Chinese Taipei to make direct or indirect invest ment in China were removed.  Since December 2008, 
QDIIs in China have been allowed to invest in Ch inese Taipei's securities and futures market.  A new 
ceiling of no more than US$500 million for investor s from China in Chinese Taipei securities was 
promulgated on 15 January 2010. 
                                                                                                                                                                     
are planning to invest, a total of US$73 billion into 66 projects in China (Economist Intelligence Unit, 2008a;  
and Council for Economic Planning and Development, 2008b). 
72 Mainland Affairs Council online information.  Viewed at:  http://www.mac.gov.tw/english/index1-
e.htm [28 August 2009]. 
73 The list is available online in Chinese only. 
74 A translated version of the positive listing was made available to the WTO Secretariat for the 
purpose of this Review.  For further details, see Departme nt of Investment Services online information.  Viewed 
at:  http://investintaiwan.nat.gov.tw/en/news/200908/2009082002.html [27 August 2009]. 
75 The Plan provides tools for the operation of a cross-strait financial supervision and management 
mechanism, and the relaxation of the restrictions on investment by Chinese Taipei in Chinese stock-related negotiable securities (Mainland Affairs Council online information.  Viewed at:  http://www.mac.gov. 
tw/english/index1-e.htm [28 August 2009]). 
76 Mainland Affairs Council online information.  Viewed at:  http://www.mac.gov.tw/english/index1-
e.htm [28 August 2009]. Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page 33 
 
 
(iii) Measures to encourage investment  
48. The legal framework of Chinese Taipei's measu res for encouraging investment (including 
inbound direct investment) was unchanged as at end 2009.77  According to the authorities, all tax and 
other incentives are applicable to all companies established in accordance with the Company Law, 
including subsidiaries of non-Chinese-Taipei comp anies.  Chinese Taipei's numerous incentives for 
direct investment include preferential tax measu res, R&D subsidies, funding incentives, including 
low-interest loans, and government participation in investment.  The authorities consider that all these 
investment measures are WTO-consistent.78   
49. Under the Statute for Upgrading Industries (SUI), until end 2009 tax incentives for 
investment in Chinese Taipei included:  (a) accel erated depreciation for certain equipment and 
facilities, such as those used for R&D, experimentat ion, and quality control purposes, as well as those 
used for energy conservation or for environmenta l protection;  (b) deduction from income tax of a 
certain amount of investment from profit-seeking ente rprises for certain equipmen t or technology (e.g. 
related to protection of the envir onment and facilitation of information technology), for investment in 
R&D and personnel training, and for investment in  resource-poor or lesser developed rural areas;  
(c) investment tax credits for shareholders in comp anies investing in "newly emerging, important and 
strategic" industries (Chapter IV), and five-year ta x holiday for such companies;  (d) tax exemption 
for 50% of royalties for personal creation or innovation;  (e) income tax exemption on technical royalty payments;  and (f) exemption from import duties and business taxes for certain industries.  
Other relevant incentives included those aimed at encouraging mergers and consolidation of 
companies.
79  
50. Following the phase-out of the SUI80, the passing of the Statute for Industrial Innovation (SII) 
will cancel most tax incentives and provide only four  types of functional and non-discriminatory tax 
incentives: for research and development, manpow er training, operations headquarters, and 
international logistics and distribu tion centers (Chapters III and IV).  By the time of completion of this 
report in mid-April 2010, the draft text of the SII had not passed by the legislature. 
51. R&D subsidies include grants of up to 40% of th e cost of development.  Eligible products 
include those:  of "newly emerging, important and strategic" industries (Chapter IV);  employing key 
technologies that surpass current standards of industrial technology in Chinese Taipei;  or having a strong linking effect and good market potential and that can stimulate the development of related 
industries.  Financial incentives include preferentia l loans, provided by the Development Fund of the 
Government of the Separate Customs Territory, for small and medium-sized enterprises to upgrade 
and purchase automation equipment.  Investors may ask  the Government to participate in up to 49% 
of the total capitalization of their investment;  the Sci-Tech Development Fund and other development 
funds, and the Management Committee of the Deve lopment Fund provide the capital on behalf of the 
Government. 
                                                     
 
77 For further details on investment incentives, see Chap ters III and IV of this report;  WTO (2006);  
and the DOIS online Investment Guide.  Viewed at:  http://www.dois.moea.gov.tw/tig/english/page.asp?class_ id=4&page=1 [2 September 2009]. 
78 APEC (2007b). 
79 Merged companies, which were approved to merge for the purpose of promoting "reasonable 
operation", are exempt from profit-seeking enterprise in come taxes and securities transaction taxes that may 
result from the merger.  The land increment tax due to plant relocation can be charged to the surviving 
enterprise. 
80 Under Article 72 of the SUI, all related tax incentives expired at the end of 2009.